Centre asks e-commerce platforms to stick to their business model

Draft e-commerce policy to be out in few weeks; stakeholder consultation process-led by Goyal held

The Centre on Wednesday asked e-commerce majors not to flout their respective business models, and ensure that a distinction is made between the inventory and marketplace models, people aware of the matter said.

This is because there is an issue of conflict because of control of warehousing through vendors by e-commerce entities, they said. In an inventory model, a firm owns goods or services, and sells them directly to customers. In the marketplace model, the e-commerce company offers a digital platform to carry out transactions between buyers and sellers.

These issues were discussed during a stakeholder consultation process spearheaded by Minister of Commerce & Industry, and Consumer Affairs Piyush Goyal.

The government also indicated that the much-awaited draft e-commerce policy and the amendments to the consumer protection rules on e-commerce would be out in a few weeks.

The meeting took place in a hybrid manner and witnessed the presence of key executives of top e-commerce companies, including Flipkart Group CEO Kalyan Krishnamurthy, Amazon India country head Manish Tiwary, and Tata Digital CEO Pratik Pal. Senior officials and founders of firms like Reliance Digital, Swiggy, Meesho and Shiprocket, as well as members of traders’ associations, such as the Confederation of All India Traders (CAIT), also participated.

Secretary, consumer affairs, Rohit Kumar Singh and Secretary, Department for Promotion of Industry and Internal Trade (DPIIT), Rajesh Kumar Singh were also present at the meeting.

“The minister (Goyal) clarified that there is a misconception that he is against companies, such as Amazon and Flipkart, but that’s not true,” one of the persons cited above told Business Standard.

“It was a very happy meeting. They have taken a lot of inputs from the industry. The biggest takeaway is that in the next few weeks or after the adjournment of Parliament, they are going to bring out the e-commerce policy and rules,” said a person familiar with the matter.

The long-standing issue of “fallback liability” between the government and the marketplaces was also discussed. The government has time and again dismissed e-commerce players’ argument that they have no control over sub-standard, counterfeit products and services sold on their platforms.

“During the discussions, companies were told that there will be some amount of ‘fallback liability’ on marketplaces (in the e-commerce policy and rules),” said a representative of a large e-commerce company that attended the meeting.

There were also discussions to align the proposed consumer protection rules on e-commerce, as well as the e-commerce policy.

The Centre had earlier tried to bring an e-commerce policy to make marketplaces more accountable and provide a level playing field for traditional offline traders. Domestic traders' bodies have been for years crying foul against the alleged illegal practices followed by foreign-funded e-tailers, such as deep discounting, promoting preferential sellers, and indirectly moving towards an inventory model of e-commerce.

As many as three drafts of the e-commerce policy have been firmed up by the DPIIT so far. It is yet to see the light of day owing to opposition from other government departments regarding particular clauses.

In June 2021, the consumer affairs ministry had also proposed another set of guidelines for e-tailers, which included banning flash sales or sale of goods at significantly reduced prices, and giving preference to the sale of locally produced goods. However, it faced stiff criticism from industry and other government departments alike, as they claimed the proposed rules could change the business model of these companies and hurt investor sentiment.

The consumer affairs ministry was supposed to come up with a revised, albeit more lenient version of guidelines soon.

During the meeting, e-commerce executives were nudged by the government to integrate with its Open Network for Digital Commerce (ONDC).

CAIT Secretary General Praveen Khandelwal said that unanimity is arrived at between all stakeholders about the basic pillars of e-commerce policy and rules. “It is also necessary to constitute a regulatory authority to monitor and regulate e-commerce trade in India. Consumer interest should be first and foremost and no backdoor loopholes should be allowed,” Khandelwal said.

 

·   The e-commerce policy, rules are expected to come out in the next few weeks, after           the parliamentary session ends.

·   Companies that attended the meeting include Amazon, Flipkart, Meesho, Snapdeal,           Swiggy, Zomato, Shiprocket, Reliance Digital and Tata Digital.

·   Policy, rules will allow for the redressal of grievances.

·   Policy, rules will ensure a distinction between marketplace and inventory models.

·   Policy, rules will ensure some amount of fallback liability on marketplaces.